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High-grade corporate

bond close lower

NEW YORK: U.S. high-grade corporate bonds slid in late trade to close lower, in line with U.S. Treasuries, with Salomon Inc debt bucking the trend after reporting near record first quarter earnings, dealers saidon Wednesday.

Investment grade spreads to U.S. Treasuries were unchanged across most maturities, except Salomon Inc paper which tightened 10 to 15 basis points bid after announcing the first quarter was the third most profitable quarter in the investment bank's history. Salomon capitalized on its positive earnings report and issued $250 million in Baa1/BBB five-year senior notes at a tight 100 basis point yield spread.

Salomon said Tuesday its first-quarter 1996 net income was $276 million versus $81 million a year ago.

Syndicate desks took advantage of relatively calm markets and a back-up in yields from recent highs to release some backlogged new issues before mid-May's quarterly refunding.

About $1 billion in new straight corporate debt priced Wednesday following Tuesday's $1.5 billion in fresh paper, dealers said.

Sun Communities Operating LP issued $150 million senior unsecured notes in a two-tranche deal, via Lehman Brothers.

The first tranche of $65 million five-year notes priced at 99.855 to yield 7.41 or 108 basis points over the five-year Treasury. The second tranche of $85 million of seven-year notes priced at 99.762 to yield 7.683 percent or 120 basis points over comparable U.S. Tresuries.

Both tranches were rated Baa3/BBB-minus.

Honeywell Inc issued $300 milion in a two-tranche deal, via lead manager Goldman Sachs & Co.

The first tranche was for $100 million in A3/A rated five-year notes and was priced to yield 40 basis points over the five-year when-issued U.S. Treasury note.

The second tranche was for $200 million in A3/A rated 12-year notes to yield 64 basis points over U.S. Treasuries.

Consolidated Edison of New York issued $100 million in A1/A-plus rated 30-year debentures via sole manager, Lehman Brothers. The notes yielded 106 basis points over comparable U.S. Treasuries.

Also, IMO Industries priced $155 million in B3/B-minus 10-year 144A notes via CS First Boston to yield 12 percent.

Looking ahead, Lockheed Martin Corp is seen tapping the new issue market with about $1.0 billion in debt via Goldman Sachs & Co, syndicate sources added. In addition, Cysco Corp is expected to issue $200 million in debt also via Goldman Sachs & Co, they added. Junk bonds lost early gains to close unchanged in light trade, high-yield dealers said.

Early gains made in the telecommunications and grocery sector were mostly erased by the close, one dealer said. In the government market, the benchmark U.S. 30-year bond closed off 18/32 at 89-16/32 to yield 6.83 percent versus 6.78 percent at Tuesday's close.-Reuter